Hedge Funds Are Crazy About Bio-Techne Corporation (TECH)

Abigail Fisher
Updated

Does Bio-Techne Corporation (NASDAQ:TECH) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Bio-Techne Corporation (NASDAQ:TECH) was in 18 hedge funds' portfolios at the end of September. TECH has seen an increase in hedge fund interest of late. There were 17 hedge funds in our database with TECH positions at the end of the previous quarter. Our calculations also showed that TECH isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce
Chuck Royce

Let's take a look at the fresh hedge fund action surrounding Bio-Techne Corporation (NASDAQ:TECH).

What have hedge funds been doing with Bio-Techne Corporation (NASDAQ:TECH)?

At Q3's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TECH over the last 13 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

TECH_dec2018
TECH_dec2018

More specifically, Renaissance Technologies was the largest shareholder of Bio-Techne Corporation (NASDAQ:TECH), with a stake worth $90.6 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $69.1 million. 12 West Capital Management, AQR Capital Management, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers were leading the bulls' herd. 12 West Capital Management, managed by Joel Ramin, assembled the most valuable position in Bio-Techne Corporation (NASDAQ:TECH). 12 West Capital Management had $59.4 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $16.8 million position during the quarter. The other funds with brand new TECH positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Matthew Tewksbury's Stevens Capital Management, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..

Let's go over hedge fund activity in other stocks similar to Bio-Techne Corporation (NASDAQ:TECH). We will take a look at Encompass Health Corporation (NYSE:EHC), News Corp (NASDAQ:NWSA), Lamar Advertising Company (REIT) (NASDAQ:LAMR), and Okta, Inc. (NASDAQ:OKTA). This group of stocks' market valuations are closest to TECH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EHC,25,401049,3 NWSA,30,712120,5 LAMR,19,310683,1 OKTA,32,601342,5 Average,26.5,506299,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $506 million. That figure was $316 million in TECH's case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand Lamar Advertising Company (REIT) (NASDAQ:LAMR) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Bio-Techne Corporation (NASDAQ:TECH) is even less popular than LAMR. Considering that hedge funds aren't fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn't behind this stock. This isn't necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None. This article was originally published at Insider Monkey.

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